Ex 99.5(e)
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY
AND SERVICE AGREEMENT
THIS AGREEMENT is entered into this ____ day of _____, 1997 by and
between RCM Equity Funds, Inc. (the "Company"), on behalf of RCM Kleinwort
Xxxxxx Emerging Markets Fund, a series of the Company (the "Fund"), and RCM
Capital Management, L.L.C. (the "Investment Manager").
1. APPOINTMENT AND ACCEPTANCE OF APPOINTMENT OF THE INVESTMENT MANAGER
Subject to express provisions and limitations set forth in the
Company's Articles of Incorporation, Bylaws, Form N-lA Registration
Statement under the Investment Company Act of 1940, as amended (the
"1940 Act") and under the Securities Act of 1933, as amended (the "1933
Act"), and the Fund's prospectus as in use from time to time, as well as
to the factors affecting the Company's status as a regulated investment
company under the Internal Revenue Code of 1986, as amended, the Company
hereby grants to the Investment Manager and the Investment Manager hereby
accepts full discretionary authority to manage the investment and
reinvestment of the cash, securities, and other assets of the Fund (the
"Portfolio"), any proceeds thereof, and any additions thereto, in the
Investment Manager's discretion. In the performance of its duties
hereunder, the Investment Manager shall further be bound by any and all
determinations by the Board of Directors of the Company relating to the
investment objectives, policies or restrictions of the Fund, which
determinations shall be communicated in writing to the Investment Manager.
For all purposes herein, the Investment Manager shall be deemed an
independent contractor of the Company.
2. POWERS OF THE INVESTMENT MANAGER
Subject to the limitations provided in Section 1 hereof, the
Investment Manager is empowered hereby, through any of its principals or
appropriate employees, for the benefit of the Fund:
(a) to invest and reinvest in shares, stocks, bonds, notes and other
obligations of every description issued or incurred by governmental bodies,
corporations, mutual funds, trusts, associations or firms, in trade
acceptances and other commercial paper, and in loans and deposits at
interest on call or on time, whether or not secured by collateral;
(b) to purchase and sell commodities or commodities contracts and
investments in put, call, straddle, or spread options;
(c) to enter into forward, future, or swap contracts with respect to
the purchase and sale of securities, currencies, commodities, and
commodities contracts;
(d) to lend its portfolio securities to brokers, dealers and other
financial institutions;
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(e) to buy, sell, or exercise options, rights and warrants to
subscribe for stock or securities;
(f) to engage in any other types of investment transactions
described in the Fund's Prospectus and Statement of Additional Information;
(g) to take such other action, or to direct the Fund's custodian (the
"Custodian") to take such other action, as may be necessary or desirable
to carry out the purpose and intent of the foregoing;
(h) to vote proxies solicited by or with respect to the issuers of
securities in which Portfolio assets are invested as of the record date for
voting such proxies ("Proxies"); and
(i) to engage Kleinwort Xxxxxx Investment Management Americas Inc.
("KBIMA") or, subject to, among other things, the approval of a majority
of the Board of Directors of the Company who are not interested persons (as
defined in the 0000 Xxx) and a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of the Fund, any other affiliate of the
Investment Manager, as the subadviser to the Fund (the "Subadviser") and,
in connection therewith, to authorize the Subadviser to do any and all of
the foregoing in the Subadviser's sole discretion, subject to the
supervision of the Investment Manager.
3. EXECUTION OF PORTFOLIO TRANSACTIONS
(a) The Investment Manager shall maintain adequate facilities and
qualified personnel for the placement of, and shall place orders for, the
purchase or other acquisition, and sale or other disposition, of portfolio
securities or other portfolio assets for the Fund.
(b) Unless otherwise specified in writing to the Investment Manager
by the Fund, all orders for the purchase and sale of securities for the
Portfolio shall be placed in such markets and through such brokers as in
the best judgment of the Investment Manager or KBIMA shall offer the most
favorable price and market for the execution of each transaction; provided,
however, that, subject to the above, the Investment Manager or KBIMA may
place orders with brokerage firms that have sold shares of the Fund or that
furnish statistical and other information to the Investment Manager or
KBIMA, taking into account the value and quality of the brokerage services
of such firms, including the availability and quality of such statistical
and other information. Receipt by the Investment Manager or KBIMA of any
such statistical and other information and services shall not be deemed to
give rise to any requirement for abatement of the advisory fee payable to
the Investment Manager pursuant to Section 6 hereof and Appendix A hereto.
(c) the Fund understands and agrees that the Investment Manager or
KBIMA may effect securities transactions which cause the Fund to pay an
amount of commission in excess of the amount of commission another broker
would have charged, provided, however, that the Investment Manager or
KBIMA determines in good faith that such amount of commission is reasonable
in relation to the value of Fund share transactions, statistical, brokerage
and other services provided by such broker, viewed in terms of either the
specific
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transaction or the Investment Manager's or KBIMA'S overall responsibilities
to the Fund and other clients for which the Investment Manager or KBIMA
exercises investment discretion. The Fund also understands that the receipt
and use of such services will not reduce the Investment Manager's or
KBIMA's customary and normal research activities.
(d) The Fund understands and agrees that:
(i) the Investment Manager and KBIMA perform investment
management services for various clients and that the Investment Manager or
KBIMA may take action with respect to any of its other clients which may
differ from action taken or from the timing or nature of action taken with
respect to the Portfolio, so long as it is the Investment Manager's or
KBIMA's policy, to the extent practical, to allocate investment
opportunities to the Portfolio over a period of time on a fair and
equitable basis relative to other clients;
(ii) the Investment Manager or KBIMA shall have no obligation to
purchase or sell for the Portfolio any security which the Investment
Manager or KBIMA, or its principals or employees, may purchase or sell for
its or their own accounts or the account of any other client, if in the
opinion of the Investment Manager or KBIMA such transaction or investment
appears unsuitable, impractical or undesirable for the Portfolio;
(iii) on occasions when the Investment Manager or KBIMA deems
the purchase or sale of a security to be in the best interests of the Fund
as well as other clients of the Investment Manager or KBIMA, the
Investment Manager or KBIMA, to the extent permitted by applicable laws
and regulations, may aggregate the securities to be so sold or purchased
when the Investment Manager or KBIMA believes that to do so will be in the
best interests of the Fund. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
shall be made by the Investment Manager or KBIMA in the manner the
Investment Manager or KBIMA considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such other
clients;
(iv) neither the Investment Manager nor KBIMA prohibits any of
its principals or employees from purchasing or selling for their own
accounts securities that may be recommended to or held by the Investment
Manager's or KBIMA's clients, subject to the provisions of the Investment
Manager's or KBIMA's Code of Ethics and that of the Company;
(v) each of the Investment Manager and KBIMA is a subsidiary of
Dresdner Bank AG. Subject to the terms of this paragraph 4, the Fund
hereby authorizes each of the Investment Manager and KBIMA, as the case
may be, to execute brokerage transactions for the Portfolio through any
direct or indirect subsidiary of Dresdner Bank AG, including, but not
limited to, Dresdner Kleinwort Xxxxxx North America LLC (collectively
"Affiliated Brokers"). The Fund understands and agrees that neither the
Investment Manager nor KBIMA will execute trades through an Affiliated
Broker unless such trades are agency trades, and that the Investment
Manager or KBIMA, as the case may be, will not execute any trades through
an Affiliated Broker when that Affiliated Broker is acting in a principal,
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or dealer, capacity. This authorization may be revoked at any time by
written notice to the Investment Manager; and
(vi) in certain instances trades executed through an Affiliated
Broker may involve "agency cross transactions" within the meaning of Rule
206(3)-2 under the Investment Advisers Act of 1940. For purposes of this
paragraph, "agency cross transactions" are trades in which an Affiliated
Broker may act as broker for both the Portfolio and the counterparty on the
other side of the transaction. The Fund understands and agrees that, when
an agency cross transaction occurs, an Affiliated Broker may receive
compensation in the form of a commission from both the Portfolio and the
counterparty. The Fund hereby authorizes each of the Investment Adviser
and KBIMA to engage in agency cross transactions through an Affiliated
Broker. This authorization may be revoked at any time by written notice to
the Investment Adviser.
4. ALLOCATION OF EXPENSES OF THE COMPANY AND THE FUND
(a) The Investment Manager will bear all expenses related to salaries
of its employees and to the Investment Manager's overhead in connection
with its duties under this Agreement. The Investment Manager also will pay
all fees and salaries of the Company's directors and officers who are
affiliated persons (as such term is defined in the 0000 Xxx) of the
Investment Manager.
(b) Except for the expenses specifically assumed by the Investment
Manager, the Fund will pay all of its expenses, including, without
limitation, fees and expenses of the directors and officers not affiliated
with the Investment Manager attributable to the Fund; fees of the
Investment Manager; fees of the Fund's administrator, custodian and
subcustodians for all services to the Fund (including safekeeping of funds
and securities and maintaining required books and accounts); transfer
agent, registrar and dividend reinvestment and disbursing agent charges;
taxes; charges and expenses of the Fund's legal counsel and independent
accountants; charges and expenses of legal counsel provided to the non-
interested directors of the Company relating to the Fund; expenses of
repurchasing shares of the Fund; expenses of printing and mailing share
certificates, stockholder reports, notices, proxy statements and reports to
governmental agencies; brokerage and other expenses connected with the
execution, recording and settlement of portfolio security transactions;
expenses connected with negotiating, or effecting purchases or sales of
portfolio securities or registering privately issued portfolio securities;
expenses of calculating and publishing the net asset value of the Fund's
shares; expenses of membership in investment company associations; premiums
and other costs associated with the acquisition of a mutual fund directors
and officers errors and omissions liability insurance policy; expenses of
fidelity bonding and other insurance premiums; expenses of stockholders'
meetings; and SEC and state blue sky registration fees.
(c) The expenses borne by the Fund pursuant to Section 4(b) shall
include the Fund's proportionate share of any such expenses of the Company,
which shall be allocated among the Fund and the other series of the Company
on such basis as the Company shall deem appropriate.
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5. UNDERTAKINGS
(a) The Investment Manager agrees:
(i) to furnish the Company with quarterly statements of the
Portfolio, valued, for each security listed on any national securities
exchange at the last quoted sale price on the valuation date reported on
the composite tape or, in the case of securities not so reported, by the
principal exchange on which the security is traded, and for any other
security or asset in a manner determined in good faith by the Investment
Manager to reflect its fair market value;
(ii) to furnish statements to the Company evidencing any
purchases and sales for the Portfolio as soon as practicable after such
transactions have taken place;
(iii) to maintain strict confidence in regard to the Portfolio;
(iv) to provide to the Company upon request a written report
with respect to the voting of Proxies by the Investment Manager or KBIMA on
behalf of the Fund. The Investment Manager shall provide such additional
reports to the Company concerning the voting of Proxies on behalf of the
Fund as shall be reasonably requested; and
(v) to indemnify the Fund against any losses, claims, damages,
liabilities or expenses arising out of or based upon any untrue statement
of any material fact contained in any registration statement, prospectus,
proxy statement, report or other document, or any amendment or supplement
thereto, or arising out of or based upon any omission to state therein any
material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent that such untrue statement
or omission was made in reliance upon and in conformity with information
furnished by the Investment Manager to the Company specifically for use in
the preparation thereof.
(b) The Company agrees:
(i) to advise the Investment Manager of the investment
objectives, policies and restrictions of the Fund and of any changes or
modifications thereto and to notify the Investment Manager promptly of any
other changes in the Portfolio of which the Investment Manager would not
otherwise have knowledge;
(ii) to advise the Investment Manager of any specific investment
restrictions applicable to the Portfolio and to give the Investment Manager
promptly written notice of any investments made for the Portfolio that the
Company deems to be in violation of such objectives or restrictions;
(iii) to maintain in strict confidence and for use only with
respect to the Portfolio all investment advice given by the Investment
Manager or KBIMA;
(iv) to take all actions necessary to effect delivery of Proxy
solicitations to the Investment Manager in a timely manner, including, but
not limited to, effecting delivery of
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any Proxy solicitation received by a third party who may hold securities
on behalf of the Fund, and to verify, or to cause such third party to
verify, at such time, that the number of shares of an issuer's securities
indicated in a Proxy solicitation equals the number of shares of such
issuer's securities held by or for the benefit of the Fund as of the
record date for voting the Proxies; and
(v) not to hold the Investment Manager, and any of its
directors, officers and employees, liable, under any circumstances for any
error of judgment or other action taken or omitted by the Investment
Manager or the Subadviser in the good faith exercise of their powers
hereunder or arising out of an act or omission of the Custodian, or of any
broker-dealer or agent selected by the Investment Manager or KBIMA in good
faith and in a commercially reasonable manner, excepting matters as to
which the Investment Manager or KBIMA shall be finally adjudged to have
been guilty of willful misfeasance, bad faith, gross negligence, reckless
disregard of duty or breach of fiduciary duty involving personal misconduct
(all as defined in the 1940 Act). The federal and state securities laws
impose liabilities under certain circumstances on persons who act in good
faith, and therefore nothing herein shall in any way constitute a waiver or
limitation of any rights which the undersigned may have under any federal
and state securities laws.
6. COMPENSATION OF THE INVESTMENT MANAGER
(a) In consideration of the services performed by the Investment
Manager hereunder, the Fund will pay or cause to be paid to the Investment
Manager, as they become due and payable, management fees determined in
accordance with the attached Schedule of Fees (Appendix A). In the event of
termination, any management fees paid in advance pursuant to such fee
schedule will be prorated as of the date of termination and the unearned
portion thereof will be returned to the Fund.
(b) The net asset value of the Fund's portfolio used in fee
calculations shall be determined in the manner set forth in the Articles of
Incorporation and Bylaws of the Company and the Fund's prospectus as of the
close of regular trading on the New York Stock Exchange on each business
day the New York Stock Exchange is open.
(c) The Company hereby authorizes the Investment Manager to charge
the Portfolio for the full amount of fees as they become due and payable in
accordance with the attached Schedule of Fees; provided, however, that a
copy of a fee statement covering said payment shall be sent to the
Custodian and to the Company.
(d) The Investment Manager may from time to time voluntarily agree to
limit the aggregate operating expenses of the Fund for one or more fiscal
periods of the Company, as set forth in Appendix A hereto or in any other
written agreement with the Company. If in any such fiscal period the
aggregate operating expenses of the Fund (as defined in Appendix A or such
other written agreement) exceed the applicable percentage of the average
daily net assets of the Fund for such fiscal period, the Investment Manager
shall reimburse the Fund for such excess operating expenses. Such
operating expense reimbursement, if any, shall be
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estimated, reconciled and paid on a quarterly basis, or such more frequent
basis as the Investment Manager may agree in writing. Any such
reimbursement of the Fund shall be repaid to the Investment Manager by the
Fund, without interest, at such later time or times as it may be repaid
without causing the aggregate operating expenses of the Fund to exceed the
applicable percentage of the average daily net assets of the Fund for the
period in which it is repaid; provided, however, that upon termination of
this Agreement, the Fund shall have no further obligation to repay any
such reimbursements.
7. SERVICE TO OTHER CLIENTS
Nothing contained in this Agreement shall be construed to prohibit the
Investment Manager from performing investment advisory, management,
distribution or other services for other investment companies and other
persons, trusts or companies, or to prohibit affiliates of the Investment
Manager from engaging in such businesses or in other related or unrelated
businesses.
8. STANDARD OF CARE
The Investment Manager shall have no liability to the Fund, or its
stockholders, for any error of judgment, mistake of law, loss arising out
of any investment, or other act or omission in the performance of its
obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
The federal securities laws impose liabilities under certain circumstances
on persons who act in good faith, and therefore nothing herein shall in any
way constitute a waiver or limitation of any rights which the Investment
Manager may have under any federal securities laws.
9. DURATION OF AGREEMENT
This Agreement shall continue in effect until the close of business
on _____ __, 1999. This Agreement may thereafter be renewed from year to
year by mutual consent, provided that such renewal shall be specifically
approved at least annually by (i) the Board of Directors of the Company,
or by the vote of a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of the Fund, and (ii) a majority of those
directors who are not parties to this Agreement or interested persons (as
defined in the 0000 Xxx) of any such party cast in person at a meeting
called for the purpose of voting on such approval.
10. TERMINATION
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Company or by the vote of a
majority (as defined in the 0000 Xxx) of the outstanding voting securities
of the Fund on sixty (60) days' written notice to the Investment Manager,
or by the Investment Manager on like notice to the Company. This Agreement
shall automatically terminate in the event of its assignment (as defined
in the 1940 Act).
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11. REPORTS, BOOKS AND RECORDS
The Investment Manager shall render to the Board of Directors of the
Company such periodic and other reports as the Board may from time to time
reasonably request. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Manager hereby agrees that all records
which it maintains for the Company are property of the Company. The
Investment Manager shall surrender promptly to the Company any of such
records upon the Company's request, and shall preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
12. REPRESENTATIONS AND WARRANTIES
The Investment Manager represents and warrants to the Company that the
Investment Manager is registered as an investment adviser under the
Investment Advisers Act of 1940. During the term of this Agreement, the
Investment Manager shall notify the Company of any change in the members of
the Investment Manager within a reasonable time after such change. The
Company represents and warrants to the Investment Manager that the Company
is registered as an open-end management investment company under the 1940
Act. Each party further represents and warrants to the other that this
Agreement has been duly authorized by such party and constitutes the legal,
valid and binding obligation of such party in accordance with its terms.
13. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination
is sought.
14. MISCELLANEOUS
(a) This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the state of California (without
regard to the principles of conflicts thereof) and the applicable
provisions of the 1940 Act. To the extent the applicable law of the State
of California, or any of the provisions herein, conflict with applicable
provisions of the 1940 Act, the latter shall control.
(b) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(c) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted
assigns. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement, whether written or oral,
between them.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the date first above written.
RCM CAPITAL MANAGEMENT, L.L.C. RCM EQUITY FUNDS, INC.
ON BEHALF OF
RCM KLEINWORT XXXXXX
EMERGING MARKETS FUND
By: ______________________________ By: ______________________________
Name: Name:
Title: Title:
ATTEST: ATTEST:
By: ______________________________ By: ______________________________
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APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
BETWEEN RCM CAPITAL MANAGEMENT, L.L.C.
AND RCM EQUITY FUNDS, INC.
SCHEDULE OF FEES
FOR RCM KLEINWORT XXXXXX EMERGING MARKETS FUND
Effective Date: _____ __, 1997
The Fund will pay a monthly fee to the Investment Manager based on the
average daily net assets of the Fund, at the annualized rate of 1.00% of the
value of the Fund's average daily net assets.
VALUE OF SECURITIES AND CASH OF FUND FEE
------------------------------------ ---
On all sums 1.00% annually
For the fiscal year ending December 31, 1997, and for each fiscal period
thereafter as may be agreed upon between the Investment Manager and the Fund,
the Investment Manager shall reimburse the Fund to the extent that the
operating expenses of the Fund (as hereinafter defined) exceed 1.50% of the
average daily net assets of the Fund. For this purpose, the "operating
expenses" of the Fund shall be deemed to include all ordinary operating
expenses other than interest, taxes and extraordinary expenses.
Dated: _____ __, 1997
RCM CAPITAL MANAGEMENT, L.L.C. RCM EQUITY FUNDS, INC.
ON BEHALF OF
RCM KLEINWORT XXXXXX
EMERGING MARKETS FUND
By: ______________________________ By: ______________________________
Name: Name:
Title: Title:
ATTEST: ATTEST:
By: ______________________________ By: ______________________________
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